<p>
  In this chapter, we discussed the historical volatility and the implied volatility. The historical volatility of an asset is the statistical measure we know as the standard deviation of the stock return series. The implied volatility of the same asset, on the other hand, is the volatility parameter that we can infer from the prices of traded options written on this asset. In contrast to historical volatility, which looks at fluctuations of asset prices in the past, implied volatility looks ahead. The two volatilities do not necessarily coincide, and although they may be close, they are typically not equal.
  Now we know the constant volatility assumption in Black-Sholes-Merton model is not applicable in the real market because there is volatility skew for most options. In next chapter, we will introduce some volatility models to capture the volatility skew in options pricing.
</p>
